Did the Legislature Get Equity Right in 2016 – Analysis and 3 Insights

Three insights emerge in the analysis of racial equity funding and strategy in the current legislative session. First, the state has made a very significant, broad based and medium term effort to build the economic assets of ALANA communities. Second, these strategies and policies can be more effective with executive action to include the diversity within the ALANA communities and to fund smaller organizations. Third, there is the need to convene grantees and state agency leaders to help maximize the investments made by the state. Such an event is proposed for September 2016 by OneMN.org. Did the 2016 Legislative Session Get Equity Right (PDF of report) See details below..

Report

This report analyzes the equity proposals funded and strategies identified in two major bills passed by the Minnesota legislature in 2016, HF 2749 and HF 848 – the supplemental budget bill and the tax bill. This follows earlier analysis over the past few months from the meeting of the legislative working group on equity to the bills that passed the House and Senate. (Note: this analysis included tax bill provisions on working family and dependent care credit that have not yet been signed into law).

Three insights emerge from the analysis of the data reported in the tables below:

First, the state of Minnesota has taken the issue of racial equity seriously reflected in four major strategies aimed at the $30 billion ALANA (African Latino Asian and Native American) economy:

By providing a significant amount of funding over a wide range of areas it has signaled a comprehensive approach towards building ALANA assets.

Funding of many strategies over a 3 year cycle indicates a longer term commitment. However future legislative bodies could change this allocation.

Bipartisan support on key strategies especially education and business development.

Creating a space for equity in the legislative process even in the conference committees

The legislation follows dis-aggregated data on ALANA communities produced by the State Demographer and a special edition of DEED’s Economic Trends documenting the need for the ALANA workforce in both the rural and metro areas, state sponsored research reports that identified structural barriers to achieving racial equity, the activities of the Governor’s Diversity and Inclusion Council, the work of the legislative working group on equity, the Governor’s equity proposals for the supplemental budget, the Senate equity subcommittee and finally the conference committee that integrated these interests into the final deliberation. This is perhaps the first time in Minnesota history that the Governor and the legislature created a unique space for equity issues to be discussed and intentionally integrated these issues into the larger policy discourse. In doing this they have set up a national model for bipartisan collaboration on racial equity and the future of the Minnesotan economy.

Second, the executive branch can help complete this progress by ensuring inclusion in the implementation of the legislation such that the programs are accessible to the wide diversity within and among the ALANA communities. This can be done through training of state personnel, better outreach and capacity building efforts and making the grant processes more accessible.

The legislation also offers some models of “pass-through” funding that can be deepened through executive action to ensure that smaller organizations can have the mentoring, capacity building and resources to do what they are doing very well. The intent of legislators in allocating larger amounts of investments through larger and more stable organizations was that they would serve as conduits of resources, mentoring and capacity building for the smaller organizations. Executive action could ensure that this capacity building and access is realized. This intent of legislators is documented in the legislative proceedings.

Finally, the legislation includes rural funding for ALANA projects and there is need to ensure access and utilization by ALANA rural communities and to open existing resources to these communities.

Third, there is the need to convene grantees and organizations to explore program effectiveness and collaboration. It also provides a way to develop an integrated and collaborative network among grantees along racial equity issues so that the investments of the state are maximized. OneMN.org proposes to facilitate such a gathering in September, 2016 in collaboration with state agencies. At this convening state agencies will also share strategies to include the diversity of the ALANA communities in the competitive grants process and to make these grants accessible to a wider range of organizations. State agencies will also share how their procurement efforts will include a larger number of ALANA businesses. In particular too would be a report to the community about how well big bucket funding items such as integration aid to schools have been effectively used to close the achievement gap.

The mission of OneMN.org is, “To civically engage and empower Minnesotans to establish mutual prosperity and a shared vision towards racial equity, social and economic inclusion.” Members include ALANA community leaders, the Wilkins Forum, Humphrey School, University of Minnesota, Minnesota Broadcasters Association, Metro Independent Business Alliance, Common Cause, Minnesota Indian Business Alliance and Color the Vote. OneMN.org is a nonpartisan multiethnic coalition working to create One Minnesota. OneMN.org has been in existence for over a decade and has played a vital role on many issues from voter empowerment and redistricting to business and workforce development.

Funding Areas

There are three types of funding proposals included in this report: those with an explicit ALANA focus and identified in the “Equity Article” of the legislation; new proposals with a strong ALANA interest; and existing large pools of money that have been marginally increased this session. These proposals are presented below:

Business Development

Table 1: Business Development

Category

Funding

Remarks

Business Development

$14 million

Over 3 years, 5 non profits

Bureau of Small Business

New state unit within a business assistance center

Equity Investments

$15 million

tax credits, 50 percent for rural, minority and women owned

New Market Tax credits

$30 million

Could be accessed low income areas

State Procurement under $25 k

Preference to ALANA businesses

Soccer Stadium Property Tax Exemption

No inclusion language

What can $14 million do for ALANA business development?

Business development grants of around $14 million over three years have been assigned mainly to 5 larger nonprofits. However conversation and committee proceedings indicate that some of this money will be “passed-through” to smaller organizations that had applied to the legislature for funding but could not be funded for technical reasons.

Recent analysis of the budgets of some leading nonprofits serving ALANA businesses revealed that the cost per business served was $5654. So if all the money was allocated to business technical assistance it would serve around 2500 ALANA businesses over 3 years. According to the Survey of Business Owners there were over 47,000 ALANA businesses in the state of which around 5000 had paid employees of which around half are female owned. So effective use of this money could help grow these businesses at various stages of the life cycle but would require a coordinated effort.

It is unfortunate the legislature did not fund the proposal for ALANA female owned businesses. In the 2015 legislative session the legislature failed to fund a smaller proposal focused on African immigrant women. Yet one will observe a very strong ALANA female entrepreneurial presence in Minnesota. A recent visit to Hmong Village illustrated the presence of strong female ALANA entrepreneurship. A female business owner said in the past 5 years she has grown her business in the mall from one stall to now 3.

The legislation helps fund equity investments through the recent MNVEST legislation and provides $15 million of tax credits out of which 50 percent is allocated for rural, minority and women owned businesses.

What can $7 million equity investment do for ALANA businesses?

Access to patient or equity capital is a huge need. Support will be needed to get ALANA businesses to this important source for equity funding. The capacity of ALANA organizations to serve businesses with equity needs are very limited and so a coordinated and capacity building effort is needed right away. For example assistance In helping potential businesses list themselves on a MNVEST portal.

The New Market tax credits of $30 million is a way to bring new investments to low income areas and is a vehicle that could help ALANA businesses grow to the next level. A number of organizations serving ALANA businesses may be certified to use this instrument as a mechanism for community economic development.

The legislation to be pro-active in the utilization of minority, veteran and other targeted businesses will be a good mechanism to leverage state dollars to grow small businesses with less than 25 employees.

The United Soccer stadium was given property tax relief but no commitments on investors to utilize ALANA businesses and workers in an area where there is a very large ALANA economy of at least $400 million. Executive action should require strong ALANA business and hiring goals.

Workforce Development

What would $51 million do for ALANA workforce development?

Around 20 organizations with workforce development and economic development projects were funded totaling $51 million over 3 years. These projects ranged from CDL training to providing workforce opportunities to former felons to help them reintegrate into the economy.

If we take the average request for the Minnesota Jobs Skills Partnership to be around $5000 then this money could train around 10,000 workers over the next three years. According to Dave Senf in DEED’s Economic Trends, minorities make up over 14 percent of the state’s employment. Around 15 percent of the almost 400,000 ALANA workers are in low wage sectors who could benefit from retooling. So out of a pool of 57000 low wage ALANA workers around 10,000 workers could be trained to move up the economic ladder over the 3 year period. Again this will need a coordinated effort among the players receiving state funding.

Table 2: Workforce/Economic Development

Category

Funding

Remarks

Workforce/broad Development

$51.05 million

Over 2-3 years, approx 20 nonprofits

Working Family Tax Credit

$158 million

Expansion over 3 years

Dependent Care Credit

$32.6 million

Expansion over 3 years

College Savings Plan Credit

$22.9 million

New, Income limits, over 3 years

Taxpayer Assistance Grants

$1.2 million

over 2 years

Adult Basic Education Aid

$97.9 million*

over 2 years

Family Medicine Residency Programs

Include immigrants with credentials

Broadband grants

$0.5 million

one time. Low income

Child Support Task Force

Child support guidelines

Chemical Dependency Treatment

DHD special rates

Substance Abuse – Pregnant Women

Grants for Indian Tribes

Student Loan Debt credit

$112 million

Over 3 years

Secure major events

$0.773 million

Human Rights Greater Minnesota

$0.18 million

Expansion

Sex Traffic prosecution

$0.820 million

IndiaFest Liquor License

Annual IndiaFest @ State Capitol

Who will benefit from the working family and dependent care tax credit expansion? (Not yet signed into law)

The working family tax credit and the dependent care tax credit were expanded and provided support to working families to help them move towards self-sufficiency. The college savings plan credit provides incentives for lower income Minnesotans to save for their children’s education. There were also some funds to help tax payers get proper advice in their annual tax returns to take advantage of tax and other incentives.

The Minnesota Budget Project has estimates across Minnesota of the people who will benefit from expansion of the working family credit and the dependent care credit. This is a great wealth building strategy and combined with tax payer assistance funded by the legislature more people can access this important resource.

An important tool is the Adult Basic Education funding that helps people complete their GED and other skills. There was a small addition to the program making the overall investment of be $97 million over the next two years.

Education

Education received a lot of policy attention as well as funding. Policy changes were inserted into the language of various sections of the existing law to explicitly include the need for diversity in teaching, staff and the learning environment.

A number of community groups such as the Coalition of Asian American Leaders were advocating for the disaggregation of data to facilitate better policy decisions. This proposal was included in the new law. There were also efforts to increase the diverse pool of teachers through increasing of funding of existing programs such as the Collaborative Urban Educator program and new programs to help paraprofessionals become teachers. There was also funding for loan forgiveness for teachers serving in high need areas and for student teachers who served in these high need areas.

Table 3: Education Funding

Category

Funding

Remarks

Achievement and Integration Aid

$134 million*

over 2 years

Alt Teacher Prep Prelim License

preliminary teacher license

Report on Teacher diversity statewide

Annual report

Student Discipline Working Group

Discipline issues

District school boards

Assess diversity of teachers

Student Performance data

Disaggregation

Teacher Loan Forgiveness

$2.4 million

over 2 years

Higher Ed Student Support Serv

$0.5 millon

College success

State Grant Program additions

$2 million

low income students

Diverse Teacher (CUE Program)

$1.79 million

over 2 years

Northside Achievement Zone

$2.41 million

over 2 years

Student Teachers in Shortage Areas

$2.8 million

stipends low income students wishing to teach in need schools after grad

Paraprofessionals to Teachers

$1.5 million

Schools over 40 percent ALANA

Support our students program

$12.1 million

Professional staff

St. Cloud preschool pilot

$0.4 million

Voluntary 4 year KG

$80 million*

Over 3 years, Open to all

Legislative Study Group on Educator Lic

new

Full Service Community Schools

$1.5 million

Over 2 years, open to all

Reading Corp

$13.25 million*

Over 2 years, open to all

How effective are the proposals to grow ALANA teachers?

The Minnesota Department of Education reports in 2015 there were 58, 211 teachers in Minnesota of which 3.8 percent were ALANA teachers, or around 2212 ALANA teachers. If the ALANA teachers were in the same proportion as ALANA people in Minnesota we would need to grow the existing pool by at least 9000 teachers. A total of $8.49 million was allocated to growing the number of ALANA teachers through various strategies and through loan forgiveness programs. If we were to recruit 9000 new teachers over the next 3 years, we would be able to offer only $943 per recruit as a state investment.

How effective is spending on integration aid to close the achievement gap?

The table below shows the allocation of 2016 integration aid by school district. There are reports required to be filed on the use of this aid but it could not be accessed on the MDE site which only lists program details. It is important to assess the effectiveness of these strategies.

Need for Student Support Staff

According to a 2014 MINNPOST article by Chris Stellar, in Minnesota there were 792 students per counselor, the worst in the region. The American School Counselor Association recommends a ratio of 250:1. This is a serious problem to be addressed if we are to effectively close the achievement and income gaps.

How effective is the state grant program in Minnesota?

To help with college affordability the state grant program was increased and elements of the program were changed in a positive way that will result in a grant increase of around $300 per student. The funding for early childhood education was also significantly expanded with an $80 million investment over two years.

The legislature increased state grant funding by $2 million. The Office of Higher Education reports that 36 percent of the state grant recipients have income below $20,000 with an average award of around $1700. In 2104 over 91.000 students received state grants totaling $172 million.

Youth

Youth programs received funding whether it was specific to Somali Youth or young girls or the Promise Neighborhoods of Minneapolis and Saint Paul. Much needed funding to increase student support services such as school counselors was to the tune of $12 million.

Table 4: Youth

Category

Funding

Remarks

Youth

$6.05 million

Over 2-3 years

St. Paul Promise Neighborhood

$2.41 million

over 2 years

Student Counselors/Support

$12.1 million

More professionals

Girls in Action

$1.5 million

college prep/leadership

Child Support Task Force

Child support guidelines

American Indian Communities

A number of proposals benefiting the American Indian communities in Minnesota were introduced making up a total of $28 million in investments in business development to the Red Lake human services initiative. Some of these are long term base funding such as for American Indian Education Aid.

Table 5: American Indian Communities

American Indian Child Welfare

$0.8 million

Child Welfare Initiative

White Earth Human Services Project

$1.4 million

Red Lake Human Services Initiative

$0.5 million

American Indian Teacher Prep Grants

$0.65 million

over 2 years

Tribal Contract Schools

$ 6.715 million *

school aid over 2 years

American Indian Education Aid

$16.618 million*

over 2 years

White Earth Band

$1 million

Mahnomen County

White Earth Band Business

($0.75 million)

Equity proposal

American Indian OIC/ Northwest

($1.38 million)

Adult and youth workforce

Other

There were some other programs funded this session listed below. Of note was an intentional effort to empower ethnic councils to help with policy development and action (see language below).

Empower Ethnic Councils but also Ensure Alignment with Community

The Ethnic Councils have a new identity and structure in the last session where they now are an official arm of the government and report and are accountable to the legislature. So it is good that there is language to empower and include them in policy decision making. However what is also needed are checks and balances to ensure that the councils are also aligned with the communities they serve. This could be addressed by integrating the voice of three community based organizations that have developed a presence in Minnesota- African American Leadership Forum, Latino LEAD and the Coalition of Asian American Leaders. Consultation with groups like these together with the Councils will help ensure alignment with community interests.

Table 6: Other

Chemical Dependency Treatment

DHD special rates

Substance Abuse – Pregnant Women

Grants for Indian Tribes

Secure major events

$0.773 million

Ethnic Councils

Assist in policy decisions

Executive Action Needed to Ensure Inclusion and Accountability

Integrate the Diversity within and Between ALANA communities

The Minnesota State Demographer and others groups like the Coalition of Asian American Leaders have brought to the attention of policy leaders the need develop and operate policies with cultural intelligence such that the diversity of the ALANA communities are integrated into policy and programing. The legislature included inclusion language only in some of the education policy areas but there is need to have consistent language across the various agencies. This is easily done by executive action. This is important because the word “diversity” can be used very selectively. For example, a statement like this integrated into all departments and programs,

“The Commissioner will ensure programs and policies are accessible to the diversity within and among immigrant and minority communities and in the metro and rural areas. The Commissioner will evaluate annually how well programs and policies are attaining this goal.”

Small Organizations have access to competitive Grants

The state is adopting the pattern of foundations where grants are allocated to large organizations. However the legislature made some interesting models for pass-through funding which could be explored and deepened further.

Smaller organizations serve niche areas and can be more nimble, innovative and accessible. However small organizations are caught in the catch 22 cycle – they need capacity to grow and funders assist only those with capacity. Conversations with legislators revealed that for certain proposals they allocated funds to large organizations with the intent that they would also provide resources to smaller organizations that applied for funding this legislative session and were included for consideration. In committee hearings the issue of “double-dipping” came up where large organizations after receiving funding this session also apply for competitive grants crowding out smaller organization. This should not be the case. There should be a funding pool for smaller organizations with mentoring and other capacity building relationships with larger organizations so it does not become a zero sum game.

Why Convene Grantees and State Agencies in September 2016?

OneMN.org proposes a convening of grantees and state agencies in September 2016 for the following reasons:

The need to develop collaboration, information sharing, accountability and coordination of efforts to maximize the effectiveness of the racial equity investments.

The need for state agencies to report progress on the big bucket spending items in their agencies in terms of ALANA communities and how they plan to make the existing and new programs accessible to the diversity within and across ALANA groups.

To develop a sense of community accountability as this forum is organized from a community perspective and not a nonprofit or state perspective.

To build community capacity to engage with policies, programs and institutions working on racial equity issues.